The Federal Reserve Friday ordered Wells Fargo not to grow until it improves its governance and to replace four board members, citing “widespread consumer abuses.”
In an order announced late Friday, the Fed said that the bank could not grow its assets beyond levels reported at the end of 2017 until it gets prior regulatory approval. The bank, America’s second largest by asset size, was also told to replace three members of its board of directors by April and to replace one more by the end of the year.
“We cannot tolerate pervasive and persistent misconduct at any bank and the consumers harmed by Wells Fargo expect that robust and comprehensive reforms will be put in place to make certain that the abuses do not occur again,” Fed chair Janet Yellen said in a statement.
The penalties imposed on Wells Fargo are unusually harsh, perhaps unprecedented. They would appear to reflect the frustration of regulators with the bank’s reluctance to take more serious measures to address years of misconduct.